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Title: Grandmothers' Labor Supply

Author(s): Wolfgang Frimmel, Martin Halla, Bernhard Schmidpeter and Rudolf Winter-Ebmer

Publication Date: December 2017

Keyword(s): Female labor supply, grandchildren, instrumental variables and timing of events

Programme Area(s): Labour Economics

Abstract: The labor supply effects of becoming a grandmother are not well established in the empirical literature. We estimate the effect of becoming a grandmother on the labor supply decision of older workers. Under the assumption that grandmothers cannot predict the exact date of conception of their grandchild, we identify the effect of the first grandchild on employment (extensive margin). Our Timing-of-Events approach shows that having a first grandchild increases the probability of leaving prematurely the labor market. This effect is stronger when informal childcare is more valuable to the mother. To estimate the effect of an additional grandchild (intensive margin), we assume that the incidence of a twin birth among the third generation is not correlated with unobserved determinants of the grandmother's labor supply (first generation). Our respective 2SLS estimation shows a significant effect of further grandchildren. Our results highlight the important influence of the extended family on the decisions of older workers and point to mediating effects of different institutional settings.

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Bibliographic Reference

Frimmel, W, Halla, M, Schmidpeter, B and Winter-Ebmer, R. 2017. 'Grandmothers' Labor Supply'. London, Centre for Economic Policy Research. http://www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12487